WASHINGTON – The Bush administration told Congress on Thursday that it opposes extending a law that provides government support in insuring against losses from terrorist attacks.
The Terrorism Risk Insurance Act (search) was passed following the Sept. 11, 2001, attacks as a way to make sure that large construction projects could get the insurance they needed to proceed. The act is due to expire at the end of this year unless it is extended by Congress.
Treasury Secretary John Snow said in a letter accompanying a Treasury report on the issue that extending the law in its current form might impede the development of the private insurance market "by crowding out innovation."
"Consistent with its original purpose as a temporary program scheduled to end on Dec. 31, 2005, and the need to encourage further development of the private market, the administration opposes extension of TRIA in its current form," Snow said.
He said the administration would accept an extension only if it included a significant increase in the size of an event that would trigger coverage; an increase in the deductibles and co-payments required; and the elimination of some lines of insurance coverage.
Snow said one reason the administration does not support an extension of the current law without changes is that the economy is now robust and doesn't need the government assistance.
Sen. Charles Schumer (search), D-N.Y., attacked the administration's findings, contending that extension of the law was needed so that major building projects could gain the insurance they need.
"Large projects cannot get financing without terrorism insurance," Schumer said in a statement. "The administration cannot have their cake and eat it too. They can't expect to warn of terrorist attacks and not provide the critical insurance programs necessary to rebuild in case of another successful terrorist attack."
But House Majority Leader Tom DeLay, R-Texas, praised the administration's recommendations.
"As Congress begins its debate on the future of terrorism insurance, it's imperative that we remember that TRIA was intended to be a temporary program," he said in a statement. "Any solution must depend on the ingenuity of the private insurance markets and not the involvement of the federal government as a re-insurer or permanent backstop."